Japan Economy - 2005

Economy - overview:
Government-industry cooperation, a strong work ethic, mastery of high technology, and a comparatively small defense allocation (1% of GDP) helped Japan advance with extraordinary rapidity to the rank of second most technologically-powerful economy in the world after the US and third-largest economy after the US and China, measured on a purchasing power parity (PPP) basis. (Using market exhange rates rather than PPP rates, Japan's economy is larger than China's.) One notable characteristic of the economy is the working together of manufacturers, suppliers, and distributors in closely-knit groups called keiretsu. A second basic feature has been the guarantee of lifetime employment for a substantial portion of the urban labor force. Both features are now eroding. Industry, the most important sector of the economy, is heavily dependent on imported raw materials and fuels. The tiny agricultural sector is highly subsidized and protected, with crop yields among the highest in the world. Usually self sufficient in rice, Japan must import about 50% of its requirements of other grain and fodder crops. Japan maintains one of the world's largest fishing fleets and accounts for nearly 15% of the global catch. For three decades overall real economic growth had been spectacular: a 10% average in the 1960s, a 5% average in the 1970s, and a 4% average in the 1980s. Growth slowed markedly in the 1990s, averaging just 1.7%, largely because of the after effects of overinvestment during the late 1980s and contractionary domestic policies intended to wring speculative excesses from the stock and real estate markets. From 2000 to 2003, government efforts to revive economic growth met with little success and were further hampered by the slowing of the US, European, and Asian economies. In 2004, growth improved and the lingering fears of deflation in prices and economic activity lessened. Japan's huge government debt, which totals more than 160% of GDP, and the aging of the population are two major long-run problems. A rise in taxes could be viewed as endangering the revival of growth. Robotics constitutes a key long-term economic strength with Japan possessing 410,000 of the world's 720,000 "working robots." Internal conflict over the proper way to reform the ailing banking system continues.

GDP:
purchasing power parity - $3.745 trillion (2004 est.)

GDP - real growth rate:
2.9% (2004 est.)

GDP - per capita:
purchasing power parity - $29,400 (2004 est.)

GDP - composition by sector:
agriculture: 1.3%
industry: 24.7%
services: 74.1% (2004 est.)

Labor force:
66.97 million (2004 est.)

Labor force - by occupation:
agriculture 5%, industry 25%, services 70% (2002 est.)

Unemployment rate:
4.7% (2004 est.)

Population below poverty line:
NA

Household income or consumption by percentage share:
lowest 10%: 4.8%
highest 10%: 21.7% (1993)

Distribution of family income - Gini index:
24.9 (1993)

Inflation rate (consumer prices):
-0.1% (2004 est.)

Investment (gross fixed):
24% of GDP (2004 est.)

Budget:
revenues: $1.401 trillion
expenditures: $1.748 trillion, including capital expenditures (public works only) of about $71 billion (2004 est.)

Public debt:
164.3% of GDP (2004 est.)

Agriculture - products:
rice, sugar beets, vegetables, fruit, pork, poultry, dairy products, eggs, fish

Industries:
among world's largest and technologically advanced producers of motor vehicles, electronic equipment, machine tools, steel and nonferrous metals, ships, chemicals, textiles, processed foods

Industrial production growth rate:
6.6% (2004 est.)

Electricity - production:
1.044 trillion kWh (2002)

Electricity - consumption:
971 billion kWh (2002)

Electricity - exports:
0 kWh (2002)

Electricity - imports:
0 kWh (2002)

Oil - production:
17,330 bbl/day (2001 est.)

Oil - consumption:
5.29 million bbl/day (2001 est.)

Oil - exports:
93,360 bbl/day (2001)

Oil - imports:
5.449 million bbl/day (2001)

Oil - proved reserves:
29.29 million bbl (1 January 2002)

Natural gas - production:
2.519 billion cu m (2001 est.)

Natural gas - consumption:
80.42 billion cu m (2001 est.)

Natural gas - exports:
0 cu m (2001 est.)

Natural gas - imports:
77.73 billion cu m (2001 est.)

Natural gas - proved reserves:
20.02 billion cu m (1 January 2002)

Current account balance:
$170.2 billion (2004 est.)

Exports:
$538.8 billion f.o.b. (2004 est.)

Exports - commodities:
transport equipment, motor vehicles, semiconductors, electrical machinery, chemicals

Exports - partners:
US 22.7%, China 13.1%, South Korea 7.8%, Taiwan 7.4%, Hong Kong 6.3% (2004)

Imports:
$401.8 billion f.o.b. (2004 est.)

Imports - commodities:
machinery and equipment, fuels, foodstuffs, chemicals, textiles, raw materials (2001)

Imports - partners:
China 20.7%, US 14%, South Korea 4.9%, Australia 4.3%, Indonesia 4.1%, Saudi Arabia 4.1%, UAE 4% (2004)

Reserves of foreign exchange and gold:
$664.6 billion (2003)

Debt - external:
NA (2002 est.)

Economic aid - donor:
ODA, $7.9 billion (FY03/04)

Currency (code):
yen (JPY)

Exchange rates:
yen per US dollar - 108.19 (2004), 115.93 (2003), 125.39 (2002), 121.53 (2001), 107.77 (2000)